India Is Now the Most Populous Country in the World: What Does This Mean for the Indian Economy?

In April, data from the UN revealed that the population of India reached 1.428 billion people, surpassing China, the longstanding demographic giant. Given the latter’s recent rise to a leading global exporter, many predict that India will also follow China’s parallel in economic success. Does India’s changing demographics signify its rise in economic power or are mere demographics a weak indicator of meaningful change?

The rise of population can positively affect the domestic economy–the economy rate inside of a country like its GDP and interaction between consumption and production. A populous country will naturally consume more goods and services, and firms will increase the production to satisfy their demand. This enables active economic exchange. Therefore, India’s economy will rise by its increased sum of taxes, which can then be used to improve the quality of life within the country.

However, the rise of population is not without downsides, especially to a heavily divided society like India’s. The country in particular is dominated by Hinduism, regarded significantly for most Indians. Hinduism embodies the caste system, which separates people by social status, triggering an economic gap between the levels. The rise of population will further intensify this gap, curbing economic growth by reduced economic activity by lower classes from inadequate wage rates.

In conclusion, the rise of population will improve the country’s economy and general level of welfare. However, the effects of the improved economy may be felt only by upper classes in the caste system, creating unexpected consequences for the poor.